Factor Investing with One MultiFactor ETF | UK & European Investors

I talk a lot about factor investing with ETFs on my channel and the most common questions I get asked surround picking and weighting factors to include in a portfolio. I have my own way of doing it, but in this video I look at ETFs that claim to solve that problem for us - multifactor ETFs.

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Timestamps:
00:00 Implementing Factor Investing
04:23 Multifactor ETF 1
08:28 Multifactor ETF 2
11:57 Multifactor ETF 3
14:20 My Thoughts on Multifactor ETFs

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[TomsPersonalFinance]

What do you think of multifactor ETFs? They're certainly worth keeping an eye on, but I prefer my approach of giving the greatest weight to the quality factor

[markusmax]

another interesting well produced video thanks for making it, i do have momentum and quality etf's but for a long term set and forget etf i do like lggg, lgug with the solactive index and ssac as an all rounder.

[cb]

Excellent video. I was surprised to see that size was not one of the factors in each of these ETFs, as value and size factors have been key to longterm outperformance. I agree with your conclusion - I'm a DIY factor investor in my SIPP, using individual ETFs, but also hold 10% of it in the Vanguard FTSe developed world ETF as my traditional benchmark.

[benjaminvolant]

Interesting points made. Good info. Thank you

[d.boekestijn]

Don't you think that the MSCI multifactor index has underperformed in recent years due to their exposure to the Value factor? If you backtest a mix of QVM factor ETF's compared to the Multifactor ETF, performance will be similar. For people paying high fees when purchasing ETF's, I think the Multifactor ETF is a good alternative since fees only need to be paid once compared to buying 3 or even 5 ETF's.

[anthonybrown]

I am drawn to value and quality but the price has to be right ie not far away from the pure index tracking costs as the performance difference would be too easily blunted. Good thinking to highlight thst multifactorial ETFs are available.

[RiskOnInvestor]

Nice vid Tom! I'm a big quality fan as well, purely for the reason that at the end of the day, i want to own the best companies, over the long run they will be the most stable and give the best 'chance' of long term returns. I would be interested to see a deep dive into how the factors are quantified. I have my own personal benchmarks, but does quality mean something different to different fund providers?

[Abdul_Rahman]

What a great video. I have never ever come across this before

[udaikeeran]

Thank you. Aa always great video. Can you consider doing a video on Hydrogen related ETFs Stocks and whether they are good for long term? Thank you.

[DanielMartinez-mnnr]

Do you think GGRG is the most solid one fund portfolio. I guess you can still class it as multi factor as it has some aspects of growth, quality and value?

[DanielMartinez-mnnr]

What do you think of sector ETFs such as VanEck Defense

[davidjones]

I would go min volatility & bonds/mmf if I was in retirement

[antonisdee]

You've missed quite a lot, most importantly performing regression analyses to get a sense of the factor loadings of the different mutlifactor ETFs. JPGL has pretty decent loadings to RmW, HmL, and CmA, with a little SmB and non-negative momentum.

Also, it makes zero sense to "judge" multifactor ETFs based on their performance relative to an index in the past few years. 20–30 years would be more appropriate.

[ciaoatutti]

I think multifactor investing are basically flood... You cannot have moment and volatility together, small size goes with growth but not necessarily goes with quality. Is a mix bag in my opinion.. Your approach may be better indeed

[princesspeach]

I copied your factor investing pie yesterday